06/01/2026
What's our opinion of Glen Canyon Dam?
It's a classic case of Infrastructure Sunk Costs Fallacy which occurs when governments continue funding and supporting massive public works or IT projects that are over budget and/or failing, simply because of the massive capital already invested. The logical error is letting unrecoverable past costs dictate future decisions, rather than evaluating future benefits versus future costs.
Why It Happens in Infrastructure:
1. Psychological Attachment: "Waste not, want not" drives the human urge to justify past decisions and avoid the embarrassment of abandoning a project.
2. Political Pressure: Elected officials often fear that admitting a multi-billion-dollar project is a failure will ruin their careers, leading them to "throw good money after bad".
2. Loss Aversion: The emotional pain of taking a definitive loss feels worse than the slow, incremental bleeding of additional funds.
Real-World Examples:
1. High-Speed Rail: Many state and national rail systems continue pouring billions of dollars into delayed, massively over-budget lines because initial phases are complete.
2. The Concorde: The UK and France continued to fund the supersonic Concorde aircraft long after it was glaringly clear it would never achieve economic profitability, solely due to prior investments.
3. Megaprojects (e.g., Tunnels & Bridges): Governments frequently tunnel halfway through a mountain or build massive incomplete highway bypasses, operating on the logic that "we are already halfway there" despite shifting economic viability.
How to Overcome It:
Rational decision-making requires ignoring all unrecoverable (sunk) costs and asking a simple, forward-looking question: "If I were starting this project today, knowing what I know now, would I still make this investment?"
By evaluating only the expected future costs (including environmental costs) against future benefits (including environmental benefits), project leaders can identify when it is actually more financially and environmentally responsible to kill a dead project rather than continue subsidizing it.
